Grand Prix wasn't a game-changer — and didn't need to be

Our view: The crucial question about Baltimore's inaugural IndyCar race is whether it prevented the city from focusing on more mundane development efforts

October 19, 2011

If Mayor Stephanie Rawlings-Blake has one regret about the Baltimore Grand Prix, it would probably be her use of the phrase "game changer" to describe the event's impact on Baltimore. Given the magnitude of the city's problems and the fleeting nature of the race, that kind of promise set up a level of expectation that three days of cars zooming around the Inner Harbor could not possibly meet.

That, essentially, is the point of a new study by Dennis Coates, a professor of economics at the University of Maryland, Baltimore County, and Michael T. Friedman of the University of Maryland's School of Public Health. The pair (with legwork from some graduate students) sought to quantify the economic impact of the race and found it wanting. Their best guess is that the event generated about $25 million in economic activity — far below the $70 million promised by the event's promoters — and that much of that money would have been spent in and around Baltimore anyway.

One can raise legitimate questions about the methodology of the survey, or even its necessity, given the fact that the city will soon produce hard data on hotel and restaurant taxes. But that is to some degree beside the point. It is the researchers' conclusion that merits discussion: "The bottom line is that the Baltimore Grand Prix was not a game changing event. It was just one more example of special pleaders using flimsy, self-interested arguments to convince politicians to do a flashy but ultimately unproductive activity rather than provide mundane but immensely important and beneficial public services."

Messrs. Coates and Friedman contend that Baltimore's primary response to its declining population and industrial base since the 1950s has been the redevelopment of its tourist centers and athletic complex centered on the Inner Harbor and that those efforts, while successful in providing outsiders with a positive impression of the city, have not resulted in a broader turnaround. Baltimore's population continues to slip, and its unemployment rate and other economic measures are still bad. Even if the race had generated the full economic impact that organizers promised — or even double or triple that much — we can have little doubt that the researchers' main point would remain. Three-day events, or even 81-day-a-year venues like Oriole Park at Camden Yards, do not by themselves catalyze great and widespread prosperity for a city.

That's true enough, but it doesn't directly answer the question of whether the race was worth the effort. To some degree, it's too early to answer that question. The event will be back next year, and organizers hope for at least three more years after that. Much of the effort and expense for the city to host the race was front-loaded on the first year, and the benefits are likely to grow as it becomes more established. Even if the figures Messrs. Coates and Friedman produced are right, it remains plausible that Baltimore will at least recoup its investment over the life span of the event.

The crucial issue is not whether the tourism dollars this event generated met the "game change" hype but rather the one raised at the very end of the Coates and Friedman paper: Did the city's focus on this event take away from other "mundane but immensely important" efforts to rebuild the city? Occurring as it did in the context of a mayoral election, it's easy to get the impression that it did. The race was the one big risk on Ms. Rawlings-Blake's resume, and there can be no doubt that City Hall went to great lengths to make sure it went smoothly, from focusing federal transportation dollars on improving the streets that made up the race course to flooding the area with police during the event.

But on the same day that The Sun reported the professors' findings, it also published an article detailing Mayor Rawlings-Blake's efforts to evaluate all of her department heads with an eye to shaking up her Cabinet. She is asking them all to discuss how they and their departments can help to reverse Baltimore's population loss and improve services for residents and businesses. She has indicated a particular interest in revamping the Baltimore Development Corp., which got a lot of criticism during the lead-up to September's Democratic primary for focusing too much on the big downtown projects that Messrs. Coates and Friedman question in their report and not enough on small business formation and growth.

We should look to the results of that effort, not the city's economic impact analysis of the Grand Prix, to determine whether Messrs. Coates and Friedman are right.